Many businesses, such as wholesale, retail and manufacturing establishments, deal in numerous items or products that are either offered directly for sale, or are used in connection with a service or product offered and/or manufactured by the business. Often large quantities of each of these items must be kept in inventory, i.e., purchased and stored/warehoused by, or for, the business owner for extended periods of time to ensure the items are available when needed. In addition, it is often cost-effective to purchase large quantities of individual units of given inventory item in order to take advantage of volume discounting. As a result, many businesses often have large amounts of operating capital invested in various inventory items owned by the business and stored/warehoused either by, or for, the business.
In many instances, in order for a business maintaining inventory items to efficiently conduct business, ensure that enough units of various inventory items are available to meet demand, and make informed and intelligent buying decisions, it is important for the business manager or owner to track the inventory items closely.
For example, a business owner's decision to purchase, or not purchase, replacement units of an inventory item, or how many units to purchase, in order to maintain stock levels largely depends on the number of units of one or more inventory items already in inventory/stock. Consequently, an inaccurate count of the number of units of one or more inventory items in stock can result in either too many replacement units being purchased, resulting in an inefficient use of operating capital and warehouse space, or too few replacement units being purchased, resulting in failure to meet demand, lost revenue, and potential customer loss, or failure to maintain parts in stock to manufacture other goods, or provide other services, and again a failure to meet demand, lost revenue, and potential customer loss.
In addition, accurate tracking of inventory items is necessary to calculate the value of a business accurately, as might be required to obtain lines of credit, or more favorable interest rates on lines of credit. In addition, an accurate tracking of inventory items is often necessary to determine a business's tax liability and/or any changes in inventory that can be expensed, such as changes due to theft, breakage, or loss.
In order to meet the need to accurately track inventory items, many businesses employ computing system implemented financial management systems. Various computing system implemented financial management systems are available including: computing system implemented business financial management systems; computing system implemented sales and inventory tracking systems; computing system implemented tax preparation systems; computing system implemented business accounting systems; as well as various other electronic transaction data driven financial management systems.
Computing system implemented business financial management systems typically provide a centralized interface with banks, and other various financial institutions, and inventory suppliers, for electronically tracking financial transactions to allow a user, such as a business owner or manager, to, for example, balance checkbooks, pay bills, track expenditures, and create and manage sales, payroll, and operating budgets.
Computing system implemented sales and inventory tracking systems help users: manage and track inventory; track sales and purchases; manage expenses; and manage operating costs. Often the computing system implemented sales and inventory tracking system is a component or function of a parent computing system implemented business financial management system.
As noted above, computing system implemented financial management systems, such as computing system implemented business financial management systems and/or computing system implemented sales and inventory tracking systems are extremely useful for helping a business owner more accurately track inventory. However, several events and/or actions that commonly involve inventory items or individual units of inventory items are typically outside the computing system implemented financial management system transaction base, and therefore outside the computing system implemented financial management system's tracking capability. For instance, theft, breakage, loss, and various other events common in a business environment, are typically not recognized by, or brought to the attention of, a computing system implemented financial management system. In addition, any errors in entering inventory data into the computing system implemented financial management system would also not be readily apparent based on the information provided by the computing system implemented financial management system, that is to say, incorrect information entered into the computing system implemented financial management system yields incorrect information out.
Consequently, in order to ensure the validity of inventory, a business owner, whether employing a computing system implemented financial management system or not, is typically required to perform a manual “physical” inventory of the entire stock, i.e. count each individual physical unit of each inventory item on a regular periodic basis. However, the performance of a “physical” inventory of the entire stock is typically extremely time intensive and, typically, can only be performed accurately when the business is closed. Therefore, physical inventory is usually not conducted as often as would be ideal, and, when conducted, is often conducted with reluctance and almost always at significant commercial cost.